CAPITAL.MY

Alternative Funding Sources for Businesses

Soft Loan Scheme for Small & Medium Enterprises (MIDF)

Soft Loan Scheme for Small & Medium Enterprises (MIDF)

The SLSME was launched in December 2001 to promote the development of small and medium enterprises in Malaysia. This Scheme assists existing as well as newly start-up enterprises in project, fixed assets and working capital financing.

The fund for this Scheme is channelled by the Government of Malaysia via SME Corporation Malaysia to MIDF for the implementation of the Scheme.

Eligibility Criteria and Main Features

1. Eligibility:

SMEs incorporated under the Companies Act 1965 or Registration of Business Ordinance 1956;
At least 60% equity held by Malaysians;
Possesses a valid premises licence ; and,
SMEs with shareholdings not exceeding 20% held by public-listed companies (only if applicable).

2. Sectors:

Manufacturing.
Manufacturing-related services.
Services (excluding insurance and financial services).

3. Financing Amount:

Minimum: RM50,000.
Project Financing – Maximum RM5 million. Fixed Assets Financing – Maximum RM5 million.
Working Capital Financing – Maximum RM3 million. IT Hardware/Software – Maximum RM500,000.

4. Items Eligible For Financing:

Industrial/Commercial land and factory/business premises construction, ready-built factories/business premises, plant, machinery/equipment and IT hardware/software.
Costs incurred for initial store renovation and upgrade of store display for retail trade.
Working capital.

5. Percentage Financing:

Fixed Assets/IT Hardware/Software:-

Up to 90% of the cost of new assets.
Up to 65% for used/reconditioned machinery/equipment which are not more than 5 years old.

Working Capital:-

Up to 100% for Purchase Revolving Credit.
Up to 80% for Sales Revolving Credit.
Up to 90% for Term Financing.

6. Repayment:

Fixed Assets/IT Hardware/Software:-

Land & building – up to 25 years including grace period of up to 2 years.
Plant & machinery & equipment – up to 7 years including grace period of up to 1 year.
IT hardware/software – up to 4 years including grace period of up to 1 year.

Working Capital:-

Purchase Revolving Credit & Sales Revolving Credit – up to 150 days for each drawdown including an option to rollover for a period not exceeding 60 days for eligible borrowers.
Term Financing – up to 3 years including grace period of up to 6 months.

7. Interest / Profit Rate:

4% per annum on yearly rest.

Definition of SMEs As Accepted by SME Corporation Malaysia:

SMEs operating in the manufacturing, manufacturing-related services and agro-based industries with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million; and,
SMEs operating in the services, primary agriculture and information and communication technology industries with full-time employees not exceeding 50 or with annual turnover not exceeding RM5 million.

www.midf.com.my